Bid to end crop insurance subsidy for tobacco worries burley growers

Alex Flores loaded tobacco on the wagon on the Switzer Farm on KY 1689 near Switzer, Ky., Monday, August 29, 2011. A crew of 6 people were picking up and housing the 23 acres of tobacco owned by Teddy Greathouse, a process that employee Stephen Gross estimated would take 2-3 days. The tobacco was cut on Friday and Saturday. Charles Bertram oe Staff

Alex Flores loaded tobacco on the wagon on the Switzer Farm on KY 1689 near Switzer, Ky., Monday, August 29, 2011. A crew of 6 people were picking up and housing the 23 acres of tobacco owned by Teddy Greathouse, a process that employee Stephen Gross estimated would take 2-3 days. The tobacco was cut on Friday and Saturday. Charles Bertram oe Staff

Kentucky tobacco growers are up in arms over a new proposal to eliminate federal crop insurance programs for tobacco.

The Council for Burley Tobacco notified farmers of the proposed change Tuesday and asked them to contact Sen. Rand Paul, R-Bowling Green, to urge him to oppose the amendment. Sen. Mitch McConnell, R-Louisville, opposes the change, the council said.

The amendment could come up for a vote in the Senate in the next two weeks, as the body debates the Farm Bill.

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Feinstein and McCain said their amendment would save $333 million over 10 years.

On Monday, McCain said in a news release that the USDA offers "heavily subsidized crop insurance policies to tobacco farmers," such as eight separate tobacco insurance products that cost $34.7 million in taxpayer subsidies last year.

Feinstein said, "It's time for the American taxpayer to get out of the business of subsidizing tobacco—once and for all. Tobacco costs our economy $200 billion in health care costs and lost productivity each year."

The savings from ending the crop insurance subsidy would be put toward the national debt, the amendment stipulates.

"The real wild card is Rand Paul," said Rod Kuegel, council president, who is in Washington lobbying lawmakers. Paul has spoken out against agriculture subsidies and has made reducing national debt a top priority in what many are seeing as a potential presidential bid.

"I think it could be very dangerous for him to go against farmers in his own state," Kuegel said.

Paul's office did not respond immediately to a request for comment.

Kuegel said that the Senate is trying to vote on the Farm Bill before the Memorial Day break, but with a hundred proposed amendments the debate may take a while.

"I don't think this is in anybody's interest to single out a crop," Kuegel said. "It isn't in farmers' interests; if they're successful for one, the ability exists to pick out another. If it's a fiscal issue, corn and wheat have the biggest subsidies."

Kuegel argued that the health consequences from smoking will be undiminished: the cigarettes will just come from overseas rather than from American farms.

The senators maintain that their amendment, which has the support of Environmental Working Group, Taxpayers for Common Sense and the American Cancer Society, will not prevent tobacco growers from purchasing policies from existing insurance providers at market rate.

But the higher insurance costs could drive many farmers out of business, said Hampton "Hoppy" Henton, a Versailles farmer who is on the burley council.

The federal program normally covers about half of the premiums for crop insurance, which increases participation.

"The only real safety net for financing is crop insurance ... it's critical for financing," Henton said. "Without crop insurance it's very difficult for many farmers to get access to credit, so they are effectively forced to go out of business."